Alan Krueger and the Economics of Terrorism

Alan Krueger, the Princeton economist tapped today by President Obama to head the Council on Economic Advisers (CEA), is best known as a labor economist. But Krueger has done important work on other subjects—including terrorism.

By Jordan Michael Smith

Tagged Economicsnational securityTerrorism

Alan Krueger, the Princeton economist tapped today by President Obama to head the Council on Economic Advisers (CEA), is best known as a labor economist. But Krueger has done important work on other subjects—including terrorism.

After the 9/11 attacks, there was a school of thought, popular but never predominant among liberals, that poverty was an explanation for terrorism. There is a certain commonsensical feel to the poverty reasoning. People are more likely to commit property crimes if they are poorer or lack education, after all. It stands to reason the same would be the case with suicidal terrorism, seemingly the most desperate of crimes.

One advocate of the poverty-breeds-terrorism view was Chicago’s then-state senator, Barack Obama. Writing in the Hyde Park Herald, Obama wrote that the 9/11 attackers’ “absence of empathy” stemmed from their “poverty and ignorance, hopelessness and despair” (italics added). Similarly, one of Bill Clinton’s CEA Chairs, Laura Tyson, wrote that defeating global poverty was essential to winning what was then called the war on terrorism.

That theory should have been instantly discredited by the obvious rejoinder that Osama bin Laden was not impoverished but a scion of Saudi oil wealth. More extensive evidence was needed to disprove the poverty canard, however, and Alan Krueger was instrumental in providing it.

In a 2003 article in the Journal of Economic Perspectives, Krueger tested the poverty myth against the evidence. First, he and his co-author, Jitka Malecková, looked at hate crimes in Germany and the United States and found they were unrelated to economic conditions. They then looked at public opinion polls supportive of terrorism in the West Bank and Gaza Strip and found that the unemployed were actually less likely to support attacks against Israeli military and civilian targets. Hezbollah members too were found likely to be less poor and better-educated than the rest of the Lebanese population. Similarly, terrorists were found frequently not to originate in poor countries at all (nor necessarily in rich countries, for that matter).

Krueger and Malecková’s study was among the first to apply the tools of economics to terrorism. The Freakonomics team got to it, but later and with much less serious purpose. So rigorous was his material that Krueger became an advisor to the National Counterterrorism Center, a most unusual position for an economist. Indeed, partly as a result of Krueger’s work, no serious analyst any longer believes poverty has anything resembling a correlation with terrorism. Other scholars, such as John Esposito and Marc Sageman (as well as the 9/11 Commission), have reached the same conclusion as Krueger.

In his 2007 book, What Makes a Terrorist: Economics and the Roots of Terrorism, Krueger went further, arguing that, contrary to popular opinion, “the uneducated, impoverished masses are particularly unlikely to participate in political processes, through either legitimate or illegitimate means” (emphasis in original). He compared terrorism not to ordinary crimes through which the poor frequently engage, but to that most Norman Rockwellesque of practices, voting. Both acts involve individuals passionate about political outcomes and sufficiently well-informed to want to express their opinions. “Instead of asking who has a low salary and few opportunities, to understand what makes a terrorist we should ask: Who holds strong political views and is confident enough to try to impose their extremist vision by violent means?” Krueger writes.

What does any of this tell us about what Krueger portends for the CEA? Well, the obvious is that he has a commitment to rigorous empiricism. But we knew that already from his more traditional economics work. More interestingly, Krueger’s terrorism work suggests a willingness to question orthodoxy and apply critical thought outside the narrow confines of his discipline. And who knows? Maybe if Obama has a job opening on his national security team, Krueger can get a gig moonlighting as a counterterrorism specialist.

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Jordan Michael Smith is a contributing editor at The New Republic. He received the 2023 Richard J. Margolis Award for social justice journalism.

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